Last month, Navy Federal emptied out the savings account where 14 year old Tammy (not her real name) saved the money she made baby sitting.

Tammy’s mom had been out of work for nine months. She was now two months behind on her second mortgage. (The second mortgage was from Navy Federal.) She just got a new job paying half of what she had been making, and she was glad to get that. But she knew she would not be able to pay the second mortgage and still feed her children.

So Tammy’s mom came to see me about filing bankruptcy. But she mentioned in passing that Navy Fed has helped themselves to her daughter’s savings account. How could they do it?

First time I heard of Navy Fed doing this, I was shocked too. But I figured out how they do it.

Warrant In Debt

A warrant in debt is what they call it in Virginia when a creditor is suing you in General District Court. Warrant makes it sound a little worse than it is, but it is bad enough. It is not a criminal law problem—you can’t go to jail; but they are trying to make you pay.

A creditor wants to make you pay—and if nothing else works, they want to make you pay with a garnishment. (A garnishment is a court order to your bank or your payroll office to send part of your money to the court instead.)

When the judge asks, do you owe this money, say “Your honor, I want a trial”

In order to get a garnishment, a creditor first has to take you to court and win. Taking you to court starts with sending you court papers. Those papers are the “warrant in debt.”

(They have to sue you in Virginia if you live in Virginia. Or where you first signed for the debt. That’s in the FDCPA, a Federal law. You should keep that in mind when you get threat letters from lawyers. A lawyer in Atlanta GA probably doesn’t come to Virginia to take people to court. A lawyer in Rockville MD probably does. A lawyer in Richmond VA does almost for sure.)

The way you get a warrant in debt is for the sheriff to come around and tape it to your door. The creditor will sometimes also mail you a copy. The warrant in debt will have a return date which is your first court date. You can find that return date in the upper right hand corner. (Where it says Hearing Date and Time.)

YOUR FIRST WARRANT IN DEBT COURT DATE

If you admit you owe the money or don’t show up on your first court date, they get a judgment. Ten days after the judgment, then they can get the garnishment.

Around here, most people don’t show up, so they automatically plead guilty to owing the debt. Ignoring court papers is usually not a good idea. Especially not in Virginia, where the judges don’t lose sleep over whether you understood what was happening.

(A lot of people call the lawyer for the creditor and ask, do I have to come to court. And usually the answer to that is no—you don’t have to come to court. And it’s true—you don’t have to come to court. It’s just if you don’t come to court you plead guilty and they can start garnishing you in ten days.)

Most people who do show up, just plead guilty.

The judge says, “do you owe this money?”

“Yes, but I can’t pay it right now.” Judge, “OK, you can discuss it with that lawyer after court.”

Do that, and you just pled guilty! The ONLY judge who cares about whether you can pay is a bankruptcy judge. Bankruptcy judges worry full time about whether you can pay, so the other judges don’t have to worry about it at all. And they don’t.

If you go on a warrant in debt, you should tell the judge you are not admitting you owe the money and you need time to talk about it with a lawyer. Some judges will really crowd you to just plead guilty, but if you stand your ground they can’t make you. “Your honor, I want a trial.”

“YOUR HONOR, I WANT A TRIAL. AND I WANT A BILL OF PARTICULARS.”

When the judge calls your name, you need to step up behind one of the podiums (the one the collection lawyer isn’t using) and claim your rights under Virginia law (and also the Constitution.) “Your Honor, I want and trial. And I want a Bill of Particulars.” Your right to a trial is right there, on the Warrant in Debt form. See where it says, To dispute this claim, you must appear on the return date for the judge to set another date for trial. That’s what you are doing. You are disputing the claim and asking the judge to set another date for trial.

Right under that is place on the form for the Judge to order a Bill of Particulars. The Bill of Particulars is their proof that you owe the money, you owe it to them, and how much you owe. Sometimes they include a lot of that with the warrant in debt. Sometimes they don’t. But either way, it’s worth asking again.

YOUR WARRANT IN DEBT TRIAL

If you show up for your first court date, don’t plead guilty and do ask for a trial, you’ll get a trial date a month or two later. At the trial you need to stop the creditor from proving that you owe the money. So you should use that month or two to talk to a lawyer, get ready to fight them yourself, or maybe try to work out a payment schedule.

(If you want to work out a payment schedule, you want to show up for court and ask for a trial. That gives the lawyer for the creditor the idea that you know a little about your rights—and so the lawyer has some reason to be fair to you.)

If you plan to fight them at the trial—with or without a lawyer—you need to first file your grounds of defense. Your grounds of defense are the reasons you think you don’t owe the money. At your first court date, the judge will give you a date for your grounds of defense. Miss that, and, you just pled guilty.

(Virginia’s system makes it easy to plead guilty to owing the money. Ignoring the first court date—you just pled guilty. Showing up and admitting you owe the money—you just pled guilty. Missing your grounds of defense deadline—oops, you just pled guilty.)

So, if you send in your grounds of defense, then you have the right to show up for trial and defend yourself.

The creditor’s lawyer probably appears in that court on hundreds or thousands of cases each year. You’re there for the first time. That gives you an idea your chances of winning without a lawyer are not all that good.

Still you have a better chance if you are being sued by a debt collector—somebody you never heard of like Asset Acceptance, NCO, CG Services, Cavalry Portfolio—rather than being sued by the company you dealt with, like Ford Motor Credit, Bank of America or Fairfax Hospital. If you know how to object to their evidence and make them prove that they really own the debt, you have a chance of winning. (Here’s my blog on how Leslie beat a warrant in debt.)

If this debt has bounced around from debt collector to debt collector, you might also win on the statute of limitations. The statute of limitations means if they left you alone for too long, they are too late. But they are only too late if you say so. Statute of limitations is an affirmative defense—meaning you have to show up and argue it; the judge won’t raise it for you. (And you’d have to put it in your grounds of defense.)

How long is the statute of limitations? It depends. The original creditor, especially a credit card company, probably will produce a notice they claim they sent you where you agree that the law of some state you’ve never been to controls the statute of limitations; and they picked that state because it has a long one.

A debt collector, however, may not have any kind of notice, so then you are protected by Virginia’s statute of limitations. How long is that? Maybe three years, maybe five. (Sorry I can’t be more specific than that.) It depends.

GETTING SUED IN THE WRONG COUNTY

One way to get some leverage on your creditor is if they sue you in the wrong county. A debt collector—those guys like Asset Acceptance, NCO, CG Services, Cavalry Portfolio—they are required to sue you in the judicial district where you live. (Or where you signed the contract; meaning where you financed the car, for example.) In Northern Virginia, each county and Alexandria City is a judicial district. (Except Loudoun and Fauquier share a district.)

An original creditor who uses a lawyer is bound by the same rules. The have to sue you in your home county.

Capital One sues nearly everybody in Richmond. (Or sometimes Henrico.) They can get away with that, because they don’t use a lawyer. However, you don’t have to just give up. And you don’t have to leave Northern Virginia at 5:00 AM driving down I-95 to get to Richmond at 8:30, either. On the back of the warrant in debt, lower left, it explains that you have the right to object to venue. If you follow those instructions and say you can’t get to Richmond and ask the judge to please move it to your home county, the judge will nearly always do it.

Then they will show up several weeks later in your home county, with a lawyer. And so you start from there.

WHAT TO DO WHEN YOU GET A WARRANT IN DEBT

You have some tough decisions. If the debt is something that you owe—and that you can afford to pay—you should pay it off. (No, they do not have to accept payment arrangements; by warrant-in-debt time you are way too late for that.)

If you don’t owe it—or are not sure—you should go to court, ask for a trial, and try to find a lawyer who will help with that kind of thing. (If you Google “Virginia debt defense lawyer,” one Manassas law firm comes up. Many lawyers who do this kind of work are members of the National Association of Consumer Advocates, and you can check their website here.)

When you go on your first court day, and you tell the judge you want a trial, you should also ask for a “bill of particulars.” The bill of particulars is their writing proving that you do owe the money. That will give you some idea about how strong or weak their evidence is. If you then get a lawyer to help you, he will really want to study their bill of particulars.

You can still file bankruptcy on most debts even after your trial on the warrant in debt. (You can’t file bankruptcy and discharge a debt for fraud–for example if they say proved you lied on your credit report, or stole the money.)

There are a couple reasons why its better to file the bankruptcy before. One is, after bankruptcy your credit report will still show that you had a judgment against you. That will make it a little harder to get back to good credit.

Second, the judgment may become a lien on your real estate. (Less likely if you own the real estate as husband and wife.) The bankruptcy may not be able to get the judgment off. It depends.

Third, if you wait until after your warrant in debt court date and you get garnished, you may not be able to get that money back. You sometimes can if you see a bankruptcy lawyer and file your bankruptcy fast enough.

So, if you are thinking about bankruptcy when you get a warrant in debt, its better to talk to a lawyer quickly.